No News Is Good News

The proposed state-run 401(k) plan did not come up for vote in the House before the session ended, and therefor did not pass. This certainly does not mean the issue is dead as we may see a similar bill proposed in the future, but we will not see this plan in the immediate future.

Below are a few examples of some of the House amendments to the bill that were drafted. Many were voted down, and most were not even called, but I find them to be interesting insights into the minds of those proposing the bill. I believe that, not only do we need to educate small business owners in Connecticut (and throughout the country) about how qualified retirement plans work, but we need to educate our elected officials as well. A more educated population will be more inclined to support the retirement plan industry, rather than try to work around us.

A sampling of the proposed amendments to CT SB-652:

* After line 20, insert the following: "(d) The state hereby waives sovereign immunity with respect to any claims arising out of the implementation or administration of the program established by this section. "

* Strike everything after the enacting clause and substitute the following in lieu thereof: "Section 1. (Effective July 1, 2008) (a) The Department of Economic and Community Development shall conduct a study evaluating tax-qualified defined contribution retirement programs that provide retirement investment plans, including, but not limited to, those created under Section 401 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, to self-employed individuals, small employers and organizations qualifying as tax-exempt pursuant to Section 501(c)(3) of said Internal Revenue Code.
(b) On or before January 1, 2009, said department shall submit the results of such study, in accordance with the provisions of section 11-4a of the general statutes, to the joint standing committee of the General Assembly having cognizance of matters relating to commerce. "

* Strike lines 6 to 8, inclusive, in their entirety: In line 9, strike "amended" and insert in lieu thereof "plans that have a maximum fee structure of one and one-half per cent of gross assets"

* Strike lines 2 and 3 in their entirety and insert the following in lieu thereof: "small employer" means an employer that has not more than ten employees. "

* In line 2, strike "hundred" and insert "thousand" in lieu thereof

* In line 2, strike "one hundred" and insert "fifty" in lieu thereof

* After line 20, insert the following: "(d) A small employer shall not be liable for financial losses incurred by employees through investments made pursuant to the tax-qualified defined contribution retirement program established pursuant to subsection (b) of this section. "

* After the last section, add the following and renumber sections and internal references accordingly: "Sec. 501. (NEW) (Effective from passage) As part of the tax-qualified defined contribution retirement program established pursuant to subsection (b) of section 1 of this act, the third-party administrator chosen pursuant to subsection (c) of said section 1 shall, at no cost to the employer or employees, contact in person or by telephone each employee on their own time once every three months to (1) review the performance of said employees' investments, (2) make necessary adjustments to said employees' portfolios as applicable, (3) ensure that employees are educated in understanding market fluctuations, and (4) protect the financial interests of said employees. "

* After line 20, insert the following: (d) The Comptroller shall not implement the provisions of this section until obtaining a performance bond or general liability insurance in an amount sufficient to insure any judgments against the state of Connecticut, the Treasurer, or the Investment Advisory Council established pursuant to section 3-13b of the general statutes, that may arise out of the implementation of this section. "

* After line 20, insert the following: "(d) The Comptroller shall not establish such plan if the Comptroller determines that such plan would not be in compliance with the requirements of the Employee Retirement Income Security Act of 1974. The Comptroller may begin to allow purchase and investment into the plan if the Comptroller determines that the state plan is compliant with said act. "